India’s Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a new Small Hydro Power (SHP) Development Scheme for FY2026-27 to FY2030-31, allocating INR 2,584.6 crore (about $310m) to support 1.5 GW of new capacity.
The scheme targets projects between 1MW and 25MW and is expected to prioritise deployment in hilly and north-eastern states, where untapped small hydropower potential remains significant.
Under the programme, central financial assistance will be higher for projects in north-eastern states and districts along international borders, set at INR 3.6 crore per MW (about $430,000/MW) or 30% of project cost, capped at INR 30 crore per project (about $3.2m).
For other states, support is set at INR 2.4 crore per MW (about $290,000/MW) or 20% of project cost, with a cap of INR 20 crore per project (about $2.1m).
The government has earmarked INR 2,532 crore (about $305m) for project support and expects the scheme to mobilise around INR 15,000 crore (about $1.6bn) in total investment. All plant and machinery is expected to be sourced domestically.
An additional INR 30 crore (about $3.2m) will fund the preparation of detailed project reports (DPRs) for around 200 future projects, aimed at building a development pipeline.
The scheme is projected to generate approximately 5.1 million person-days of employment during construction, with further jobs in operations and maintenance. As decentralised projects, small hydro installations are expected to require limited transmission infrastructure and reduce losses.
The government said the programme is intended to accelerate development of small hydropower, particularly in remote areas, while limiting environmental impacts compared with large hydro projects.
